Correlation Between The Hartford and Qs Us

Can any of the company-specific risk be diversified away by investing in both The Hartford and Qs Us at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining The Hartford and Qs Us into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Hartford Small and Qs Small Capitalization, you can compare the effects of market volatilities on The Hartford and Qs Us and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in The Hartford with a short position of Qs Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Qs Us.

Diversification Opportunities for The Hartford and Qs Us

0.89

Correlation Coefficient

The Hartford  Qs Us

Very poor diversification

The 3 months correlation between The and LMBMX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Small and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization and The Hartford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Hartford Small are associated (or correlated) with Qs Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of The Hartford i.e., The Hartford and Qs Us go up and down completely randomly.

Pair Corralation between The Hartford and Qs Us

Assuming the 90 days horizon The Hartford is expected to generate 1.16 times less return on investment than Qs Us. But when comparing it to its historical volatility, The Hartford Small is 1.08 times less risky than Qs Us. It trades about 0.21 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,334  in Qs Small Capitalization on October 24, 2024 and sell it today you would earn a total of  59.00  from holding Qs Small Capitalization or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

The Hartford Small  vs.  Qs Small Capitalization

Hartford Small

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qs Small Capitalization

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Small Capitalization are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Qs Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Hartford and Qs Us

The main advantage of trading using opposite The Hartford and Qs Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Qs Us can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qs Us will offset losses from the drop in Qs Us' long position.

The idea behind The Hartford Small and Qs Small Capitalization pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.